For some, the CD may as well be displayed in a glass cabinet in an ancient history museum.

Woolworths certainly thinks so and its decision this week to stop selling CD singles sounded the format's death knell. Its justification for the move was simple - a slump in UK sales from 55.7 million in 2000 to only 8.6 million last year.

Woolworths is not the first high street retailer to go down this path. Asda, the supermarket group, made the same choice last year.

Internet downloading is undoubtedly the biggest challenge to the sale of CDs that high street retailers have had to cope with. The upsurge in downloading has caused some to rethink their strategies and create stores aimed at a new generation of music fans. HMV, for example, has become increasingly focused on DVDs, which are now responsible for 50 per cent of group sales. Games, electrical devices such as iPods, and merchandise - from Star Wars mugs to Lord of the Rings T-Shirts - have also become more important. While HMV maintains that the CD albums market is still buoyant - with CD albums remaining the format of choice, accounting for more than 95 per cent of sales volume - they are now responsible for only one third of HMV's revenues.

HMV believes it has the answer to encourage people to continue buying instore instead of using its online rivals. Its strategy is to transform a visit to its high street stores into a social experience, with the launch of a number of 5,000 sq ft “next generation stores”. The stores will feature downloading kiosks and offer free internet access. Whether young people will choose to meet in an HMV store at the weekends has yet to be seen, but the retailer hopes it is a step in the right direction.

HMV, which accounts for 50 per cent of the CD singles market, said that pulling out of the physical singles market was not part of its next generation strategy. An HMV spokesman said that Woolworths' exit would help HMV to gain market share, but he added that it undermined the level of critical mass HMV needed to keep the singles market alive.

HMV has remained committed to older formats, which it believes has worked to its advantage. It has seen a revival in 7in and 12in vinyl sales in recent years - a format that Woolworths abandoned in 1994 - and said that vinyl has greater floorspace than CD singles. Positioning itself as a specialist has become increasingly important as competition from supermarkets and the internet increases. It is in the process of reopening a number of Fopp stores - traditional record shops favoured by lovers of less commercial music. HMV acquired the Fopp brand after the independent record store went into administration following significant online investment.

“Fopp expanded too quickly online, but has always had a huge high street following,” said the spokesman, adding that the traditional record store was far from dead.

The industry and the way people purchase music is still changing and, despite their efforts, it is unlikely that HMV or Woolworths know if their decisions are the right ones.

With internet retailers such as Amazon and Play.com having significantly lower outgoings than high street retailers and supermarkets able to sell loss leaders, the future of the high street music retailer remains uncertain.

Helen Marquis, the head of music category at Play.com, believes that there will always be a place for the high street and the right solutions will be found, but questions whether high-tech kiosks at HMV will be enough to woo customers.

“For consumers, it is really about finding who is offering the lowest prices,” she said.

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